Hasta La Gadget!

Many believe that poor people deserve to be poor because they’re lazy. As Speaker John Boehner has said, the poor have a notion that “I really don’t have to work. I don’t really want to do this. I think I’d rather just sit around.”

In reality, a large and growing share of the nation’s poor work full time — sometimes sixty or more hours a week — yet still don’t earn enough to lift themselves and their families out of poverty.

It’s also commonly believed, especially among Republicans, that the rich deserve their wealth because they work harder than others.

In reality, a large and growing portion of the super-rich have never broken a sweat. Their wealth has been handed to them.

The rise of these two groups — the working poor and non-working rich — is relatively new. Both are challenging the core American assumptions that people are paid what they’re worth, and work is justly rewarded.

Why are these two groups growing?

The ranks of the working poor are growing because wages at the bottom have dropped, adjusted for inflation. With increasing numbers of Americans taking low-paying jobs in retail sales, restaurants, hotels, hospitals, childcare, elder care, and other personal services, the pay of the bottom fifth is falling closer to the minimum wage.

At the same time, the real value of the federal minimum wage is lower today than it was a quarter century ago.

In addition, most recipients of public assistance must now work in order to qualify.

Bill Clinton’s welfare reform of 1996 pushed the poor off welfare and into work. Meanwhile, the Earned Income Tax Credit, a wage subsidy, has emerged as the nation’s largest anti-poverty program. Here, too, having a job is a prerequisite.

The new work requirements haven’t reduced the number or percentage of Americans in poverty. They’ve just moved poor people from being unemployed and impoverished to being employed and impoverished.

While poverty declined in the early years of welfare reform when the economy boomed and jobs were plentiful, it began growing in 2000. By 2012 it exceeded its level in 1996, when welfare ended.

At the same time, the ranks of the non-working rich have been swelling. America’s legendary “self-made” men and women are fast being replaced by wealthy heirs.

Six of today’s ten wealthiest Americans are heirs to prominent fortunes. The Walmart heirs alone have more wealth than the bottom 40 percent of Americans combined.

Americans who became enormously wealthy over the last three decades are now busily transferring that wealth to their children and grand children.

The nation is on the cusp of the largest inter-generational transfer of wealth in history. A study from the Boston College Center on Wealth and Philanthropy projects a total of $59 trillion passed down to heirs between 2007 and 2061.

As the French economist Thomas Piketty reminds us, this is the kind of dynastic wealth that’s kept Europe’s aristocracy going for centuries. It’s about to become the major source of income for a new American aristocracy.

The tax code encourages all this by favoring unearned income over earned income.

The top tax rate paid by America’s wealthy on their capital gains — the major source of income for the non-working rich — has dropped from 33 percent in the late 1980s to 20 percent today, putting it substantially below the top tax rate on ordinary income (36.9 percent).

If the owners of capital assets whose worth increases over their lifetime hold them until death, their heirs pay zero capital gains taxes on them. Such “unrealized” gains now account for more than half the value of assets held by estates worth more than $100 million.

At the same time, the estate tax has been slashed. Before George W. Bush was president, it applied to assets in excess of $2 million per couple at a rate of 55 percent. Now it kicks in at $10,680,000 per couple, at a 40 percent rate.

Last year only 1.4 out of every 1,000 estates owed any estate tax, and the effective rate they paid was only 17 percent.

Republicans now in control of Congress want to go even further. Last Friday the Senate voted 54-46 in favor of a non-binding resolution to repeal the estate tax altogether. Earlier in the week, the House Ways and Means Committee also voted for a repeal. The House is expected to vote in coming weeks.

Yet the specter of an entire generation doing nothing for their money other than speed-dialing their wealth management advisers is not particularly attractive.

It puts more and more responsibility for investing a substantial portion of the nation’s assets into the hands of people who have never worked.

It also endangers our democracy, as dynastic wealth inevitably and invariably accumulates political influence and power.

Consider the rise of both the working poor and the non-working rich, and the meritocratic ideal on which America’s growing inequality is often justified doesn’t hold up.

That widening inequality — combined with the increasing numbers of people who work full time but are still impoverished and of others who have never worked and are fabulously wealthy — is undermining the moral foundations of American capitalism.

ROBERT B. REICH’s film “Inequality for All” is now available on DVD and blu-ray, and on Netflix. Watch the trailer below:

Any Canadians curious about where Prime Minister Stephen Harper’s plan to turn the country into an energy superpower is heading need look no further than the provincial budget just tabled by Alberta. The collapse in oil prices has turned a once-enviable budget surplus into a monster $5-billion deficit.

What makes Alberta’s current predicament even more troubling is how little of its royalty wealth the province has saved. In the last 25-plus years, Alberta has contributed barely anything to its Heritage Savings Fund, which was established in the mid-1970s by Premier Peter Lougheed. It now stands at $17 billion, which is a mere pittance compared to its potential. And it’s not like this is a case of twenty-twenty hindsight. Over the years, Albertans have consistently wondered why its Conservative governments weren’t being more prudent with their oil wealth.

When sovereign wealth funds are discussed, the first example out of the box is typically Norway, which has put away nearly $900 billion despite only starting to save its North Sea oil royalties in 1990. A more damning comparison that highlights the ironic fiscal myopia of oil-rich, Tory-dominated Alberta, though, is tiny East Timor. Compared to Alberta, the southeastern Asian island nation has a fraction of the oil and gas production, a third of the population, and considerable social and political unrest. Yet, it also boasts a wealth fund equal in size.

Instead of saving, Alberta governments have put resource royalties towards financing the so-called Alberta Advantage, part of which included a flat 10 percent personal income tax rate and no provincial sales tax. In theory, such choices are designed to attract other industries to the province in much the same way that Texas, which has no state income tax, tries to use its oil revenues to convince companies in footloose industries, like electronics, to set up shop in the state. In practice, the main beneficiary of the province’s policy decisions, as ever, is Alberta’s oil industry, as the rapid expansion of the oil sands will attest.

Premier Jim Prentice has vowed to wean the province from its fiscal dependence on oil, a promise Albertans have heard before. The last time oil prices crashed in 2008, then Finance Minister Ron Liepert pledged to do the same. Since then, Alberta has only become even more dependent on resource royalties, as production from the oil sands continued to march higher. Should Albertans believe this government anymore than the others? Neither side, as it happens, may have a choice.

The problems of Alberta’s oversized and high-cost oil sands industry aren’t due to a wild, yet cyclical part of the commodity price roller coaster that will ultimately self-correct. We now have nearly a decade of evidence that shows the high crude prices counted on by the oil sands industry aren’t compatible with healthy global economic growth. Not only have those prices produced the deepest recession of the post-war era, but the ensuing recovery also continues to be among the weakest on record.

What’s more, Alberta’s oil sands also faces new competition for refinery space from the millions of barrels of tight oil that’s being fracked from previously inaccessible shale formations. Not long ago, US shale production, which now doubles the output from the oil sands, was off the radar.

Even more troubling for Alberta’s oil industry, as well as future provincial budgets, is the global move towards reducing carbon emissions. The world doesn’t yet have a binding global agreement on emissions in place, but that hasn’t stopped individual countries from taking their own steps. Consider the measures adopted to fight coal-fired emissions in the U.S. and China, the world’s two largest coal-burning economies. The new rules have hurt coal prices and the value of coal companies as much as any future global pact likely could.

Alberta’s government should be thinking deeply about what happens when countries turn their attention from the coal-fired emissions pouring out of smokestacks to the oil-fired ones spewing out of tailpipes. According to the International Energy Agency, the fight against climate change means world oil demand will need to peak in the next five years and then start falling considerably in order to keep atmospheric carbon from reaching even more dangerous levels.

The new realities of climate change mean Premier Prentice may be right in spite of himself. The imprint of oil revenues on future provincial budgets is bound to become much fainter, as will the oil industry’s profile to Alberta’s economy. In a world of increasing carbon constraints and low economic growth, the oil sands look more like a stranded asset than the source of any fiscal advantage. The sooner Alberta can wean itself from its resource addiction, the better off the province will be in the long run.

For the week of 29 March 2015

This week begins with the shift from Berkano as the half-month rune, to Ehwaz. With its emphasis on purpose and that of our intuitive stave, Hagalaz, the suggestion of dramatic change in consciousness prevails, this week.

Read right to left in the image is Ehwaz, followed by Hagalaz.

Berkano remains the half-month rune through 30 March, at which point Ehwaz steps up, through 14 April. To learn more about the half-month rune’s influence and my work with the runes, visit Patreon.
Remember the green light we’ve been waiting for? This week is it.

The half-month cycle of Tiwaz to Berkano, now transitioning to Ehwaz, has led us on a journey from loss and survival, to restoration and now action. With Ehwaz we realize our ability to adapt. From a position of inner power we can see the leveled playing field of our lives, and make informed choices in how we move forward with intention. This is the point that we apply all the changes of the last few weeks.

Hagalaz indicates “hail,” and this stave is about deep transformation in perspective. Related to the eldest Norn, Urd, guardian of ‘that which was,’ it suggests a thing of the past becoming bygone. Most likely an ideal or view of how our purpose should manifest, this relic is quickly replaced with cutting edge insight. Think evolution. Think release of the past. Know improvement for the present.

This week packs a power punch in the ranks of subtle, yet intense movement. Breathe into it. Realize the work leading up to it is completed. Be guided the changed view of reality that best suits you at this time.

—

Find my runic artwork on Etsy.

Originally published at Soul Intent Arts.

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